Executive Bonus

The success of any business requires intelligent strategy and planning. An executive bonus plan can be an effective way to retain and reward key employees who are essential to the company’s success. Executive bonus plans are typically designed to retain employees who are crucial to growing and sustaining a company’s bottom line. People are the backbone to most business’ and permanent life insurance can be a tool to keep them around. Benefits obtained through a permanent life insurance are a combination of death benefit coverage and accumulated cash value which can be used as an income stream in retirement.

How It Works

An executive bonus plan does not have to be offered to all employees which makes it appealing for business owners from a cost standpoint. In addition to other incentives offered by the company, an executive bonus plan allows the business to move funds out of the corporation in an efficient, tax-deductible manner, while the employee/executive gains the added benefit of the life insurance coverage, cash value, and any accelerated benefits included in the policy. Generally, after the employee/executive is approved for a life insurance policy the business pays the premium directly to the life insurance company. The employee/executive receiving the bonus pays income tax on the amount of the bonus in the year constructive receipt has occurred.

Executive bonus plans are appealing to business’ who are looking for qualified plan alternatives. Moreover, because the employee/executive is the owner of the policy they get to choose the beneficiaries, or used the policy’s cash value as needed.